Last close As at 06/08/2026
GBP2.22
▲ 1.00 (0.45%)
Market capitalisation
GBP508m
Research: TMT
GB Group (GBG) has confirmed that trading since it last reported in December has been stronger than expected. Continued benefits from the US stimulus packages and higher volumes of bitcoin and retail share trading have boosted Identity volumes. We have upgraded our FY21 forecasts to reflect new company guidance, with FY22 and FY23 estimates substantially unchanged.
GB Group |
Upgrading FY21 forecasts |
Trading update |
Software & comp services |
25 February 2021 |
Share price performance
Business description
Next events
Analyst
GB Group is a research client of Edison Investment Research Limited |
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GB Group (GBG) has confirmed that trading since it last reported in December has been stronger than expected. Continued benefits from the US stimulus packages and higher volumes of bitcoin and retail share trading have boosted Identity volumes. We have upgraded our FY21 forecasts to reflect new company guidance, with FY22 and FY23 estimates substantially unchanged.
Year end |
Revenue (£m) |
EBITA* |
PBT* |
Diluted EPS* |
DPS |
P/E |
03/19 |
143.5 |
32.0 |
31.3 |
15.4 |
3.0 |
53.6 |
03/20 |
199.1 |
47.9 |
45.7 |
17.9 |
0.0 |
46.2 |
03/21e |
213.1 |
53.2 |
51.5 |
19.8 |
6.0 |
41.6 |
03/22e |
212.5 |
48.0 |
46.9 |
17.9 |
3.3 |
46.2 |
03/23e |
235.5 |
53.7 |
52.8 |
20.0 |
3.6 |
41.2 |
Note: *EBITA, PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Identity performance remains buoyant
In H121, the company reported that its Identity business had benefited from high volumes of applications for US government COVID-19-related financial support, and high levels of demand have continued so far in H221. In January and early February, GBG also benefited from higher volumes of bitcoin and retail share trading in both the US and Europe. Consequently, for FY21 management expects to report revenue of at least £213m and adjusted operating profit of at least £53m.
Upgrading forecasts for FY21
We have assumed that most of this strong performance is specific to the pandemic and will not carry through into FY22 and FY23. We have raised our FY21 revenue forecast by 7%, which translates to a normalised EPS uplift of 19%. We leave our FY22 and FY23 forecasts substantially unchanged, as potential revenue upside from the improving fortunes of travel and leisure customers is likely to be offset by the effect of the strength of sterling versus the US dollar. The company expects to provide a further trading update for FY21 in the week starting 19 April.
Valuation: Premium rating reflects growth potential
GBG trades at a premium to the UK software and IT services sectors and at the upper end of its Identity management peer group on a P/E basis, reflecting its strong growth outlook (post COVID-19), high recurring revenues and strong balance sheet. Our reverse DCF analysis estimates the current share price is factoring in operating margins of 22.6% and revenue growth of 15.6% per year from FY24, at the upper end of the group’s revenue and margin targets. Outside of faster-than-expected COVID-19 recovery, triggers for upside could include successful cross-selling from recent acquisitions, adoption of GBG’s combined identity/location solution and, in the medium term, accretive acquisitions.
Changes to forecasts
Exhibit 1: Financial summary
£m |
FY21e |
FY21e |
|
|
FY22e |
FY22e |
|
|
FY23e |
FY23e |
|
|
old |
new |
change |
y-o-y |
old |
new |
change |
y-o-y |
old |
new |
change |
y-o-y |
|
Revenues |
198.7 |
213.1 |
7.2% |
7.0% |
212.5 |
212.5 |
0.0% |
(0.3%) |
235.4 |
235.5 |
0.0% |
10.8% |
Gross profit |
143.1 |
153.5 |
7.2% |
6.4% |
153 |
153 |
0.0% |
(0.3%) |
169.5 |
169.6 |
0.0% |
10.8% |
Gross margin |
72.0% |
72.0% |
0.0% |
(0.4%) |
72.0% |
72.0% |
0.0% |
0.0% |
72.0% |
72.0% |
0.0% |
0.0% |
EBITDA |
49.0 |
57.2 |
16.6% |
10.5% |
52.1 |
52.1 |
0.0% |
(8.8%) |
58.0 |
58.1 |
0.1% |
11.4% |
EBITDA margin |
24.7% |
26.8% |
2.2% |
0.8% |
24.5% |
24.5% |
0.0% |
(2.3%) |
24.6% |
24.7% |
0.0% |
0.1% |
EBITA |
45.0 |
53.2 |
18.1% |
10.9% |
47.9 |
48.0 |
0.0% |
(9.8%) |
53.7 |
53.7 |
0.1% |
12.0% |
EBITA margin |
22.7% |
25.0% |
2.3% |
0.9% |
22.6% |
22.6% |
0.0% |
(2.4%) |
22.8% |
22.8% |
0.0% |
0.2% |
PBT |
43.4 |
51.5 |
18.8% |
12.7% |
46.8 |
46.9 |
0.0% |
(9.1%) |
52.8 |
52.8 |
0.1% |
12.8% |
EPS - normalised, diluted (p) |
16.7 |
19.8 |
18.8% |
10.9% |
17.9 |
17.9 |
0.0% |
(9.8%) |
20.0 |
20.0 |
0.1% |
12.0% |
EPS - reported (p) |
7.5 |
10.7 |
42.0% |
21.5% |
8.7 |
8.7 |
0.1% |
(19.1%) |
11.1 |
11.1 |
0.1% |
27.8% |
DPS (p) |
6.0 |
6.0 |
0.0% |
N/A |
3.3 |
3.3 |
0.0% |
(45.0%) |
3.6 |
3.6 |
0.0% |
9.1% |
Net debt/(cash) |
15.4 |
11.1 |
(28.2%) |
(68.0%) |
(14.2) |
(20.4) |
43.7% |
(284.2%) |
(47.9) |
(54.1) |
13.0% |
165.4% |
Net debt/EBITDA (x) |
0.3 |
0.2 |
N/A |
N/A |
N/A |
N/A |
||||||
Divisional forecasts |
||||||||||||
Revenue |
||||||||||||
Identity |
115.8 |
130.2 |
12.4% |
23.5% |
125.8 |
126.2 |
0.3% |
-3.0% |
139.4 |
139.9 |
0.3% |
10.8% |
Location |
50.2 |
50.2 |
0.0% |
-2.5% |
54.2 |
53.9 |
(0.6%) |
7.3% |
60.7 |
60.3 |
(0.6%) |
12.0% |
Fraud |
30.1 |
30.1 |
0.0% |
-15.1% |
32.5 |
32.5 |
0.0% |
7.7% |
35.3 |
35.3 |
(0.0%) |
8.8% |
Group |
198.7 |
213.1 |
7.2% |
-0.2% |
212.5 |
212.5 |
0.0% |
-0.3% |
235.4 |
235.5 |
0.0% |
10.8% |
Adjusted operating profit |
||||||||||||
Identity |
37.2 |
45.3 |
21.9% |
34.7% |
38.1 |
38.2 |
0.3% |
-15.6% |
42.2 |
42.4 |
0.3% |
10.8% |
Location |
14.3 |
14.3 |
0.0% |
-4.5% |
15.2 |
15.1 |
(0.6%) |
5.6% |
17.0 |
16.9 |
(0.6%) |
12.0% |
Fraud |
6.7 |
6.7 |
0.0% |
-50.2% |
8.4 |
8.4 |
0.0% |
26.2% |
9.5 |
9.5 |
(0.0%) |
13.0% |
Group |
45.0 |
53.2 |
18.1% |
10.9% |
47.9 |
48.0 |
0.0% |
-9.8% |
53.7 |
53.7 |
0.1% |
12.0% |
Adjusted operating margin |
||||||||||||
Identity |
32.1% |
34.8% |
30.3% |
30.3% |
30.3% |
30.3% |
||||||
Location |
28.4% |
28.4% |
28.0% |
28.0% |
28.0% |
28.0% |
||||||
Fraud |
22.2% |
22.2% |
26.0% |
26.0% |
27.0% |
27.0% |
||||||
Group |
22.7% |
25.0% |
22.6% |
22.6% |
22.8% |
22.8% |
Source: Edison Investment Research
Exhibit 2: Financial summary
£'000s |
2017 |
2018 |
2019 |
2020 |
2021e |
2022e |
2023e |
||
March |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
87,468 |
119,702 |
143,504 |
199,101 |
213,131 |
212,520 |
235,497 |
Cost of Sales |
(20,302) |
(27,092) |
(36,060) |
(54,914) |
(59,677) |
(59,506) |
(65,939) |
||
Gross Profit |
67,166 |
92,610 |
107,444 |
144,187 |
153,455 |
153,014 |
169,558 |
||
EBITDA |
|
|
18,734 |
28,741 |
34,080 |
51,739 |
57,154 |
52,113 |
58,053 |
Operating Profit (before amort. and except.) |
17,006 |
26,311 |
32,031 |
47,945 |
53,186 |
47,959 |
53,703 |
||
Acquired intangible amortisation |
(4,022) |
(7,885) |
(10,316) |
(19,008) |
(18,900) |
(18,900) |
(17,900) |
||
Exceptionals |
(1,410) |
(2,143) |
(4,003) |
(1,552) |
(93) |
0 |
0 |
||
Share of associate |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Share based payments |
(994) |
(2,375) |
(2,287) |
(4,541) |
(4,995) |
(5,495) |
(6,044) |
||
Operating Profit |
10,580 |
13,908 |
15,425 |
22,844 |
29,198 |
23,564 |
29,759 |
||
Net Interest |
(498) |
(508) |
(689) |
(2,218) |
(1,655) |
(1,105) |
(855) |
||
Profit Before Tax (norm) |
|
|
16,508 |
25,803 |
31,342 |
45,727 |
51,531 |
46,854 |
52,848 |
Profit Before Tax (FRS 3) |
|
|
10,082 |
13,400 |
14,736 |
20,626 |
27,543 |
22,459 |
28,904 |
Tax |
668 |
(2,746) |
(2,583) |
(3,562) |
(6,610) |
(5,390) |
(6,937) |
||
Profit After Tax (norm) |
13,206 |
20,642 |
24,760 |
35,210 |
39,163 |
35,609 |
40,165 |
||
Profit After Tax (FRS 3) |
10,750 |
10,654 |
12,153 |
17,064 |
20,932 |
17,069 |
21,967 |
||
Ave. Number of Shares Outstanding (m) |
131.6 |
150.6 |
158.1 |
193.6 |
195.4 |
197.1 |
198.4 |
||
EPS - normalised (p) |
|
|
10.0 |
13.7 |
15.7 |
18.2 |
20.0 |
18.1 |
20.2 |
EPS - normalised and fully diluted (p) |
|
9.9 |
13.5 |
15.4 |
17.9 |
19.8 |
17.9 |
20.0 |
|
EPS - (IFRS) (p) |
|
|
8.2 |
7.1 |
7.7 |
8.8 |
10.7 |
8.7 |
11.1 |
Dividend per share (p) |
2.4 |
2.7 |
3.0 |
0.0 |
6.0 |
3.3 |
3.6 |
||
Gross Margin (%) |
76.8 |
77.4 |
74.9 |
72.4 |
72.0 |
72.0 |
72.0 |
||
EBITDA Margin (%) |
21.4 |
24.0 |
23.7 |
26.0 |
26.8 |
24.5 |
24.7 |
||
Operating Margin (before GW and except.) (%) |
19.4 |
22.0 |
22.3 |
24.1 |
25.0 |
22.6 |
22.8 |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
105,653 |
170,284 |
438,683 |
430,219 |
411,001 |
392,947 |
375,798 |
Intangible Assets |
98,753 |
161,372 |
425,646 |
414,505 |
390,981 |
371,931 |
353,881 |
||
Tangible Assets |
2,856 |
4,700 |
4,815 |
9,420 |
10,502 |
11,497 |
12,398 |
||
Other fixed assets |
4,044 |
4,212 |
8,222 |
6,294 |
9,519 |
9,519 |
9,519 |
||
Current Assets |
|
|
48,914 |
61,121 |
76,522 |
95,984 |
90,988 |
118,403 |
156,399 |
Debtors |
30,569 |
37,969 |
54,992 |
66,554 |
76,727 |
76,507 |
84,779 |
||
Cash |
17,618 |
22,753 |
21,189 |
27,499 |
8,761 |
36,397 |
66,121 |
||
Other |
727 |
399 |
341 |
1,931 |
5,499 |
5,499 |
5,499 |
||
Current Liabilities |
|
|
(44,444) |
(56,942) |
(77,030) |
(86,459) |
(89,627) |
(91,996) |
(101,112) |
Creditors |
(36,436) |
(56,100) |
(70,302) |
(80,280) |
(85,424) |
(87,793) |
(96,909) |
||
Contingent consideration |
(7,122) |
(45) |
(5,287) |
(6,179) |
(4,203) |
(4,203) |
(4,203) |
||
Short term borrowings |
(886) |
(797) |
(1,441) |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(15,940) |
(16,711) |
(116,707) |
(94,810) |
(46,413) |
(36,727) |
(26,981) |
Long term borrowings |
(11,499) |
(8,451) |
(85,447) |
(62,139) |
(19,833) |
(16,002) |
(12,002) |
||
Contingent consideration |
0 |
0 |
0 |
0 |
(458) |
(458) |
(458) |
||
Other long term liabilities |
(4,441) |
(8,260) |
(31,260) |
(32,671) |
(26,122) |
(20,267) |
(14,521) |
||
Net Assets |
|
|
94,183 |
157,752 |
321,468 |
344,934 |
365,949 |
382,627 |
404,104 |
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
16,305 |
31,620 |
27,779 |
48,498 |
49,150 |
54,703 |
58,896 |
Net Interest |
(498) |
(545) |
(689) |
(1,768) |
(1,454) |
(936) |
(855) |
||
Tax |
(2,193) |
(3,247) |
(2,930) |
(6,386) |
(12,367) |
(11,245) |
(12,684) |
||
Capex |
(2,227) |
(2,018) |
(1,625) |
(1,339) |
(2,900) |
(3,000) |
(3,100) |
||
Acquisitions/disposals |
(36,840) |
(70,363) |
(255,101) |
(81) |
(2,089) |
0 |
0 |
||
Financing |
24,755 |
56,668 |
157,339 |
(1,553) |
(1,037) |
(2,000) |
(2,000) |
||
Dividends |
(2,775) |
(3,582) |
(4,049) |
(5,761) |
(5,855) |
(5,886) |
(6,534) |
||
Net Cash Flow |
(3,473) |
8,533 |
(79,276) |
31,610 |
23,447 |
31,636 |
33,724 |
||
Opening net debt/(cash) |
|
|
(8,673) |
(5,233) |
(13,505) |
65,699 |
34,640 |
11,072 |
(20,395) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
33 |
(261) |
72 |
(551) |
121 |
(169) |
0 |
||
Closing net debt/(cash) |
|
|
(5,233) |
(13,505) |
65,699 |
34,640 |
11,072 |
(20,395) |
(54,119) |
Source: GB Group, Edison Investment Research
|
|
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